Insurance Market in Ghana : An Overview of Saham Insurance Ghana by Mabel Porbley

Interview with Mabel Porbley, Managing Director of Saham Insurance Ghana

What is your assessment of the insurance market in Ghana?

The insurance market has become very competitive because you have quite a small market, under 2% of the market and 27 companies, each of them wanting to grow. The competition will eventually push us to be more innovative with products to target new markets. This is especially due to the coming increase in capital to 50 million. Until the recent discussion about new capital, the capital in the market was 15 million. Shareholders will be requesting a good return on their investment which means the competition will get even worse and companies will need to find new ways and new markets to make the capital work well.

Is it going to be less competition because some of the companies are not going to be able to reach this level?

If you look at the posture of the regulator, that is what they are expecting. The previous capital increase was from 1 million to 15 million, but not many companies merged. Only two companies merged to one. So, we still have the same number of companies in the market. We cannot really tell at this point whether companies are going to find partners and merge or just go out and look for the capital and remain as substantive companies.

What are the latest trends in the market?

We will look at partnerships in areas where we are able to pay a claim fast, from a risk survey perspective or a loss survey perspective or from a payment platform perspective, so that we are able to pay our legitimate claims on time.

We need to find ways of improving the market from a penetration perspective where we can grow it from the current 1.15. This will come from some compulsory insurances within the market that will then push the premiums up. In the non-life space, the only real compulsory insurance is motor insurance and fire insurance for commercial spaces. But, most commercial places, especially those that are informal, do not abide by the regulation, especially regarding fire insurance. It is supposed to be compulsory, but in reality, it is not. The industry, the regulator, the police, the fire service are trying and they do a task force supervision to see who has the required insurance, but how much can they do? We need to find a way within our market and some of these other markets to link these aspirations. If we want to make commercial fire compulsory, can we link it, for instance, to the business operating model or certificate, so that when you go for a building permit for a commercial place, you must prove that you have it covered for fire before you get the permit? Then we might get people to want to change the concept because they know that if they do not get it, they cannot get their license. That is the way we should look at going. Once we increase the market, we need to find some of these areas to improve commercial insurance and also look at individual and personal insurances. We have been very conservative and done the same things much of the time. If it is not auto insurance as it is now or has been for so many years, then it is homeowners and the same straightjacket kind of product that everyone else is selling. We need to find innovation there and see how we now introduce products around lifestyles. Appliances have become a huge thing. The moral hazard there is pretty high from an insurance perspective. But as an insurer, how do you also reduce the model? Can you develop your products so that it takes into consideration the moral hazard and still makes you sustainable and profitable? That is where we need to go in terms of getting innovation and using technology with insurances for personal coverage. Otherwise, it is going to be tough, especially with the increase in capital.

What are your key competitive advantages? Where do you have better or more competitive offers?

Currently, our key competitive advantage is in the commercial space and specialized coverage, especially because of the group we belong to. As Saham, and soon Sanlam, we have specialized arms dealing in specialized coverages like mining, energy, oil, construction, or large bonds. Those are areas that we would have a huge competitive advantage in the market, especially with the Sanlam takeover. We intend to grow that significantly. Looking especially in the government space, Ghana is on the development tangent regarding energy and infrastructure. In those spaces, how do we enter there with the level of expertise we have from over 100 years of doing this? How do we bring that to bear in this market as Saham or eventually Sanlam? In the medium to long term, we want to create a huge competitive advantage in the retail space, especially on personal lines and being able to use technology to a large extent to make insurance convenient and accessible. So, you would not need to walk to my office or a branch office to get your insurance. You can actually choose what you want, for how long, from when, and for what type at any time just from the comfort of your phone or online and after we ask you a few questions and we can match you to an existing product. We have a very aggressive five-year strategy, so we have to be aggressive as well in our distribution agenda.

Are you looking for some technological R&D or partnership?

Partnerships are the way to go. We cannot invest in everything. Our core business is insurance; however, for some of these ideas you would have to work with partners, like either fintech companies or teleco companies to be able to deliver some of the solutions that we would want to give. When someone buys an insurance coverage, they are basically buying a claim. We can develop all the best and innovative products and the specialized lines, but the bottom line is being able to pay the claim and paying it on time because that is what the customer is buying when they buy a policy. We will look at partnerships in areas where we are able to pay a claim fast, from a risk survey perspective or a loss survey perspective or from a payment platform perspective, so that we are able to pay our legitimate claims on time. It then gives the customer a certain level of confidence in insurance as a whole and in us as Saham. This market is not very endeared to insurance. They will not buy unless it is really needed or there is a regulation that is pushing them to buy. So, we need to build that level of confidence from a claim perspective to be able to win and even grow the market. The top line is heavily hinged on whether you are paying your claims or not and how quickly you pay your claims.

What kinds of non-life insurance do you offer?

We have commercial lines and personal lines. Commercial lines refers to business lines where you have liability lines that cover your liabilities as a businessperson. We have accident lines for things like workman’s compensation for the staff in the case of an accident or death. Then, we have the professional liability where you take it either for your staff or for your directors so you have a professional indemnity cover. You have a public liability, so should anything happen to a third party whilst they are in your workspace, you are covered. Then, we have coverages in engineering or construction where we do contractor’s all risk which covers the process of construction including machinery, erection, and taking down. We cover bonds on a case by case basis. Then, we have what we call goods and transit coverage which is more on the commercial side. We cover you when you are taking goods from one place to another. We also cover stock for warehousing. We offer property coverage as well. We also offer specialized areas like energy or oil where we cover specific things depending on the request. So, we are quite large on the commercial side. Then, when you come to the personal side, we have personal accident, automotive, homeowners, you can have phone and electronics insurance where we cover your laptop, etc. Currently, we do not have a phone insurance yet. In this market it is a major moral hazard area. A few companies have tried it. It comes back to the systems, structures, and technology. For instance, if you say you will cover a phone when it breaks, it will break tomorrow. So, you will probably just end up paying the claim and really not getting the pool that allows you to pay the claim. That notwithstanding, it is still an area that we need to look at as an insurance provider and how we can cover some of these things. Whether we like it or not, that market is growing and it is growing very fast and we need to find a way of entering into it.

There is a major change happening this year. What specifically is in the process?

In March of last year, Sanlam communicated that it was buying Saham, even though it had been a minority shareholder. In October, it announced that the transaction had been concluded. We are now 100% owned by the Sanlam Group which sits in South Africa. We are currently going through an 18-month period of transition and integration between the two companies. The sale was a strategic one. Sanlam was in certain countries and Saham was in certain countries. Putting them together, right away we were in 34 countries in Africa, not counting the other presence in Asia, the UK, Europe, and America. This has made us the biggest pan-African insurer in the market. We are actually able to do global solutions for multinationals. For a company like Coca-Cola that has a lot of presences and a lot of companies but usually would want a Group coverage, we are now their first point of call because we can immediately give them access to 34 countries out of the 54 in Africa. Now, with that, we are integrating systems, people, structures, and our brand as a whole. We have moved from being just Saham to being Saham, a member of the Sanlam Group. In Ghana, we are quickly going to change to be Sanlam by the end of the year which then brings us the value that the Sanlam brand has in Africa. The Sanlam brand is quite well known for what it stands for in terms of delivering a certain level of professionalism, bringing a certain level of expertise to their work. They have been around for 100 years, so you can be sure that it is not a fly by night company. It will be there and it will deliver on its values. That is what we are going through now with people and systems. We are currently going through a software change for our core business, so we are hoping that once all of this is done that we will be positioned enough from a technological perspective, people perspective, and a better understanding of the market to be able to deliver what we aspire to do.

If all this can be achieved, how do you see the company here in Ghana in the medium term, two to three years’ time?

We will be the preferred destination if you are looking for insurance, whether in personal lines, specialized lines, or commercial lines. It is a very steep objective but we believe it is achievable mainly because of the group that we are part of. In fact, Sanlam has been in this market before as a minority shareholder in the number one company, Enterprise, and they pulled out when they were buying us. It has been done before, so doing it again will not be very difficult. We intend to grow very quickly into the top five in the next five years, which is a lot of work. We want to be known for what we promise and what the brand stands for at the end of the day, which is creating wealth for people through our offerings and using technology to give convenience.

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